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Self-employment rises as survival option for more African Americans

As jobs become harder to find, more African Americans are turning to self-employment for financial survival. WASHINGTON—As jobs become harder to find, more African Americans are turning to self-employment for financial survival, driving up the numbers of home-based businesses owned by African Americans, officials said.

However, Ron Busby, president and CEO of the U.S. Black Chamber, said that despite the growing legion of entrepreneurs, the growth of black-owned businesses is stymied by limited access to capital and a lack of large-scale business opportunities.

“The fact that black-owned businesses have grown in numbers is encouraging, but that’s not the complete picture,” said Busby.  “A closer look at Census data reveals that these businesses are small and immature in terms of company size, annual receipts, and other key factors.”

According to the U.S. Census Bureau’s 2007 Survey of Business Owners (SBO) blacks owned 1.9 million businesses in the United States, accounting for 7.1 percent of all nonfarm businesses.  Although there was a significant jump in the number of black-owned businesses – up 60.5 percent from 2002 – 94.4 percent of these firms had no paid employees. Only 106,824 were employer firms, employing 921,032 persons with a total payroll of $23.9 billion. These firms reportedly generated $98.9 billion in receipts.

“This study proves that although black businesses are growing in number, we are not growing in size, capacity and revenue,” said Aubry Stone, president of the California Black Chamber of Commerce.  “Our business community is dominated by home-based businesses and mom and pop shops. These are great displays of entrepreneurial spirit, but not the vehicle we need to spark real economic empowerment in the black community.”

Busby and Stone said that the increase in black businesses likely has been sparked, in part, by an increase in unemployment. Although the national unemployment rate stands at 9.4 percent, unemployment in the African-American community is closer to 16 percent. As corporations and government agencies continue to cut jobs and slow hiring, to survive, African Americans have been moved to start their own business.

Consequently, Busby urges a more determined effort by government, corporate America and national business organizations to help black businesses build the capacity to grow. He argues that a coordinated and concerted effort is needed to ensure that African-American business owners are aware of, and have access to, government programs such as the Small Business Administration’s Small Loan Advantage Program and the Community Advantage Loan Program. Both programs help expand access to capital so business owners can expand their operation and create jobs.

“This is the time for all hands on deck,” Busby said. “We need to pool our resources, leverage our strengths and develop a national strategy to drive real black business growth.”

The U.S. Black Chamber has already taken steps in this direction by starting a dialogue with the White House, the U.S. Small Business Administration, and the National Minority Supplier and Development Council.  The USBC is looking at ways to build an infrastructure to give black business owners greater access to loans and technical assistance programs.

The USBC supports black chambers of commerce and business leagues in their work to develop and grow black enterprises. Overall, the 1.9 million African-American owned businesses employ over 921,032 persons, and generate $137.5 billion in annual revenue.

(To learn more about the USBC, visit www.usbci.org)